Streamlined ObamaCare Application Leaves Program Open to Insurance Fraud

NCPA May 6, 2013

Last month, the federal government floated a 61-page draft application that people would use to sign up for the Affordable Care Act's ("ObamaCare") financial subsidies. (Coming to Hawaii this fall.) After a political rebuke over the form's length, the Department of Health and Human Services has released a streamlined, three page version of the same application. However, the government's new form is going to be an invitation to fraud and abuse, says Scott Gottlieb, a resident fellow at the American Enterprise Institute.

• The length of the old application was largely driven by the need to ensure that consumers were actually eligible for the government subsidies that ObamaCare offers as a way to offset the cost of buying health insurance.
• Under the law, people are entitled to government money to defray those costs, depending on their historical income level.
• The subsidies start for families and individuals above 133 percent of the Federal Poverty Level (FPL) and then decline through rising income levels.
• The subsidies are no longer available once people reach 400 percent of the FPL.
• That comes out to about $95,000 in annual income for a family of four. (People below 133 percent of FPL will be offered Medicaid).

Those 61 pages of the old application were mostly filled with questions to make sure that people were eligible to get the subsidies. The government needs to verify their income and make sure that they aren't eligible for health insurance at work. The government also needs to verify that people aren't eligible for other public health insurance programs like Medicaid or Veteran's benefits before they receive subsidies to buy coverage on the exchanges.

The new form largely takes your word for it all. This leaves one of three possibilities:

• First, that the government is willing to tolerate a lot of fraud and waste as subsidies flow to individuals who weren't eligible for the money in the first place.
• Second, the government is going to rely on the states and the private health plans to ask the probing questions, essentially foisting the vetting process onto other entities so that these actors are the targets of any political backlash.
• Or third and most likely, it's some combination of each of these devices.

Source: Scott Gottlieb, "Streamlined ObamaCare Application Leaves Program Open to Insurance Fraud," Forbes, May 1, 2013.